Apple Lays Out Case for $2B Penalty

SAN JOSE, Calif. — Samsung should pay damages of $2.191 billion, according to an Apple expert. The Korean giant is still shipping phones that infringe at least one Apple patent, he added, suggesting willful infringement that carries a possibility for triple damages.

Separately, another expert showed a survey concluding consumers would pay from $44 to $102 for access to some of the patented Apple features.

Economist Christopher Vellturo laid out much of Apple's case against Samsung in testimony here Tuesday afternoon. Samsung attorneys will get a chance to cross examine him on Friday.

Vellturo's firm, Quantitative Economic Solutions LLC, built a database of sales of infringing phones, based on access to Samsung's financial records. He showed the eight-person jury confidential details of estimated revenues and profits from those phones. Samsung shipped more than 37 million accused devices, an infringement he called "massive."

Samsung's 10% share of the smartphone market in 2007, when Apple launched the iPhone, declined to a low of 5% by late 2009, according to a chart Apple showed from International Data Corp. As the infringing phones came on the market in late 2010, it then rapidly rose to nearly 35% in mid-2012 where it remains today, according to IDC.

Apple accuses Samsung of infringing five patents in nine smartphones and one tablet. Six of the phones were launched between August and November 2011, and the other devices followed in 2012. The IDC figures show Samsung's market share rising rapidly starting in early 2010, before the first infringing phones hit the market.

"The iPhone fundamentally changed the market, shifting power from hardware to software... creating huge challenges for Samsung because historically they were strong in hardware," said Vellturo. "A central aspect was improving the UI, and these patents were an important part of the strategy Samsung used to get into a two-horse race with Apple and stay there."

"This happened while many people were buying their first smartphones -- that first smartphone purchase is so important," because it influences future purchases, noted Vellturo, who holds a doctorate in economics from MIT.

Apple has paid Vellturo about $560,000 to date, based on 800 hours of work at $700 an hour. In addition, Apple paid his staff an unspecified amount. "There was a lot of data to keep track of... it was a big undertaking," he said.

Anyone remember the 1987 sci-fi film "Predator". In the final scene the alien is trapped and badly injured and activates his wrist computer.

This is a flip open device on his wrist abut the size of a mobile phone. When opened the the alien slides his 'finger' across the bottom of the screen in exactly the motion used in "slide to unlock". The screen then activates.

The rights to the film were held by 20th Century Fox (now 21st Century). So both Appla and Samsung should pay them, except of course Fox never patented the intelectual property (only copyrighted the film) and even if they had it was well over 16 years before the first iPhone came out so any patent would have expired anyway...

I agree that's a lot of cash, but their burn rate is quite high which makes 159B only a lot while they continue to sell phones at a price of their choosing. Look at the car industry and how various players fortunes wax and wane they might make a few billion profit one year then lose it on a roll of the dice. For all of those enslaved Apple employees and share holders I hope I'm wrong, but it has all happened before (that a large company does a duck dive)

Can't patent a phrase. It might be possible to copyright it although it's a bit brief for that. You could trademark it. (IANAL).

When you think about it, a patent is 20 something years, copyright is life of author plus 75 years (thanks to Disney not wanting to support the constitution) but a trademark is perpetual while you are trading and willing to defend it.

1. I'm surprised that there are any SW patents given the way the US constitution is written. SW is a written description of what something is supposed to do in a step by step fashion. It's essentially a document. Algorithms and documents aren't patentable.

2. A patent has to be non-obvious to someone skilled in the art.

3. no prior art. You can't make a mechanical windmill patent and then when it expires a SW windmill patent.

4. If someone paid me $750 an hour I'd say anything was true too (well not really but then I'm not a troll)

5. Viewing screens have been rectangular since they were invented with the exception of Nipkov screens maybe.

6. Touch screens have been around since at least the early 90's

Basically Apple is a has-been, they haven't introduced anything "new" since the Apple 3G. They're losing marketshare because of their inability to innovate and their unwillingness to compete on price or freedom. Lock-in of customers and lock-out of competitors seems to be their only strategy. When this case is over Apple might have increased their bottom line by a few billion for a once off, but within 2 years they will be broke.

I agree. Survey me too. When my Blackberry Torch finally dies, I will buy a more advanced smartphone and it will NOT be an iPhone. All the smartphones out there have all the features that I really need, so my decision will be based on which company is the least arrogant and the least annoying - and the least expensive cost to own. None of those 'features' describe Apple's products. Bigger screens and longer battery life are nice too.

It's easy to say someone is violating your patents, but do the patents in question have any validity in the first place?

Apple's patent for a phone shaped into a rectangle with rounded corners appears to me to be an insult to the whole patent system. I don't know if this is one of the patents in question with Samsung, but some of the ones I've read about seem blatantly obvious.

In my opinion, for patents to have some validity there has to be some "meat" behind the technology. I think that is the real question. There are too many patents out there, from many different sources, that are so obvious anyone could have dreamed them up in 30 seconds if they gave it any thought.

So to show that Samsung's market share rose dramatically after they adopted some of Apple's design features only shows that Apple had a good design concept to begin with.

But whether or not these design concepts are patentable, and therefore subjest to penalties, well, that is an entirely different question. The problem is, the public may love the idea of having a purple phone, and even convict a company for copying a purple phone. But everyone familiar with the patent process knows that you can't patent a device by merely changing the color. How do you relate those kinds of concepts to a jury of uninformed citizens?

Apple has neither of those features. Automatically I wouldn't have bought the iPhone for those reasons. Does it infringe on apple patents, maybe, but I think the Apple asking significant amounts of money because I chose this phone is silly.

There was no way Apple can get 100% of the smart phone market unless they build 300 different devices, using screens of all sizes, with and without stylus, and having various other features. No company has the resources to build devices of enough variety to get 100% market share.